Asian tech firms force workers to take leave

When the global recession began to take a toll on high-tech manufacturers in Taiwan, the factories gave their workers a vacation that many would have just as soon skipped.

Putting workers on forced unpaid leave, often for one or more days a week, is a tactic being adopted around the world as firms seek to cut costs and keep skilled workers on the payroll, even if there is little work to do, so that they will have resources when orders pick up.

“When an economic downturn begins to take hold, employers knee-jerk into making dramatic changes,’’ said Darryl Green, president of Asia Pacific for human resources firm Manpower.

“But there are employers who will stop at nothing to try to retain their valuable workforce. These employers — often in the manufacturing sector where skills are hard to come by — consider innovative alternatives such as shorter working weeks and short-term shut-downs.’’

Employment specialists say the phenomenon is not unique to Taiwan, and is used more broadly by manufacturers in cyclical industries, ranging from electronics makers in South Korea, to car makers in Britain, and manufacturers in Germany.

In Taiwan, the trend of forcing workers to take leave without pay, euphemistically called “unpaid vacation’’ in Chinese, began in the memory chip sector which experienced its worst-ever slump throughout most of 2008.

From there this cost savings measure has quietly spread to other key sectors such as LCD manufacturing and other chips.

In one of the clearest and most sobering signs of the times, TSMC, the world’s biggest contract chipmaker and one of Taiwan’s most profitable tech firms, said this month it will roll out its own forced leave without pay system in 2009. TSMC’s main rival, UMC, is taking similar measures.

Taiwan makes 70 per cent of the world’s made-to-order chips which are used in everything from computers to cell phones and MP3 players. TSMC and UMC, which are the biggest players in Taiwan, saw their collective sales plunge 35 percent in November from a year before, with TSMC posting its worst monthly sales in 3-years.

TSMC laid down the cold reality of its situation to employees in a December 3 letter from CEO Rick Tsai, who said he feared the current economic downturn could last for a “fairly long time.’’

“The company must do its utmost to lower costs,’’ Tsai wrote. “At the same time, we will also do all we can to protect employees’ jobs. Under these circumstances manufacturing departments have decided to take a certain amount of unpaid furlough in December. All other departments will begin to do the same on January 1.”

Sources: Agencies